Not to jump on a bandwagon here but if his power is meant to be a reflection of manipulating the chemical signals in the nervous system that bounce back and forth between the brain and an injury to produce "pain," that doesn't tie into how memories function at all save for one specific instance I can think of--causing an amount of pain so great that it inflicts psychological trauma. Considering trauma is something normally accumulated over a period of time (like growing up in an abusive household for years) or the result of something so drastic it's usually considered a miracle one survives it at all, I would think having a memory related application would indeed be very overpowered.
As for the turning into liquid thing and phasing through what he touches when coated in that liquid, to me it seems like kind of a stretch to associate. The idea behind his power is to manipulate "Pain," right? Adjusting his own sense of it fits, and having to touch someone else fits because Pain's closely aligned with the touch sense and, otherwise, he wouldn't be able to use the power offensively, but being able to phase through things and splash a liquid and whatnot just doesn't seem like an intuitive application.
It seems to me like this power would be much better suited to adjusting, causing, and transferring "pain" --why not make it so that, in addition to determining how much pain he himself feels, he can "add" his own pain to his opponent's? For example, if he gets punched in the face and lets himself feel it, and then punches his opponent in the face, his opponent feels like they've been punched in the face twice because that pain was added back.
This adds a risk-reward system to the power: he can choose to shut off or diminish his own pain sensors, which helps his endurance, but decreases his ability to deal damage, OR he can use accumulated pain to deal higher counter-damage, at the risk of taking too much pain and being defeated before he can give it back.
If you want to do something with drugs, like the pills and whatnot, rather than have those come from the power why not have him develop those as part of his occupation as a psycho doctor, like Chopper's Rumble Balls?
